Business

Sentech: The basket case

The beleaguered parastatal is expected to post a loss for the 2009/10 financial year of between R123-million and R214-million.

Sentech chief executive Sebiletso Mokone-­Matabane and her senior management’s days are numbered.

The Mail & Guardian has in its possession an internal ministry of communications report that calls for ‘serious consideration” to be given to replacing the board and executive management.

The report calls for an interim management structure to be put in place at the parastatal to oversee Sentech’s turnaround strategy.

It has been reported that Sentech board members Yvonne Muthien and Deenadayalen Konar have already resigned.

The beleaguered parastatal is expected to post a loss for the 2009/10 financial year of between
R123-million and R214-million. This follows R191-million in losses posted between 2005 and 2009.

It emerged this week that Sentech will be called to account before Parliament in two weeks’ time.

Sentech is a broadcast signal ­distributor and has attempted to diversify into the telecoms and broadband market.

‘Rudderless’
The report, which was drawn up by a ministerial task team appointed by Communications Minister Siphiwe Nyanda, claims that the board has no oversight over the operations of the business and describes the parastatal as ‘rudderless, inadequately funded and misdirected”.

There is a commonly held view within the industry that Nyanda is in fact cleaning up the mess that former communications minister Ivy Matsepe-Casaburri allowed Sentech to get into.
Matsepe-Casaburri died in April last year.

‘In Ivy’s era there was a lot of talking, but not a lot of action,” said one industry insider. ‘Nyanda is like the janitor with the broom cleaning up her mess.”

Some sources within the industry and within the department of communications also suggested that Mokone-Matabane was a relative of Matsepe-Casaburri’s, but Mokone-Matabane denied this to the M&G.

The communications ministry report states that:

Sentech is in urgent need of a turnaround strategy;

Sentech requires the implementation of drastic measures to avoid lapsing into terminal decline;

Sentech has a misaligned business strategy;

Sentech has committed a number of violations in terms of the Public Finance Management Act;

Financial reporting may be in violation of the Public Finance Management Act;

There is a lack of accountability and consequences for non-­performance at Sentech and this has led to an increase in operational inefficiencies;

The Sentech board and exco are not focused on the efficiencies of the business;

Sentech’s management structure is disjointed; and

Sentech is dependent on the SABC for up to 75% of its revenue.

The task team emphasised the fact that Sentech’s ‘thorny” financial position had been caused by its unprofitable telecoms products.

This was reinforced by numerous industry players who spoke to the M&G this week. They said that Sentech had a massive opportunity to become a major player in the wireless broadband market between 2002 and 2003, but it had ‘missed the boat”.

In 2007 the Sentech board took a decision to discontinue all non-­performing telecoms products after a request from government.

These included Sentech’s MyWireless, Biznet and VAS services but, as the 2009 annual report states, this will be completed only in 2010.

‘Too late to claw back into market’
But the 2009 annual report also shows that in the 2008 and 2009 financial years, since the decision was taken, these services cost Sentech R385-million while bringing in only R39-million in revenue.

‘It’s too late to claw back into that market now,” said Industrial Development Corporation analyst Richard Hurst. ‘In 2002-03 they had a great opportunity to enter the wireless broadband market and they let it slip between their fingers.”

The task team maintains that Sentech’s degeneration into its loss-making situation began with the awarding of telecoms licences and the organisation’s attempts to launch its telecoms services without adequate funding, robust business plans and well-thought-out ­strategies.

One industry player who had dealt with Sentech on a business level described the parastatal’s senior management as ‘incompetent”.

The industry player said Sentech’s telecoms products were technically good, but the customer service was a joke.

Matsepe-Casaburri had big plans for Sentech, which included rolling out a national wireless broadband network. But these plans didn’t come to fruition because national treasury didn’t approve the parastatal’s business plans for the wireless network.

Sentech requested R3,8-billion to roll out the wireless network.

‘Thank god for treasury,” said one industry insider when questioned about Sentech’s failures to get its business plans approved.

Research ICT Africa director Alison Gillwald said that Sentech’s woes were symptomatic of the wider absence of a coordinated national policy and vision for the sector.

‘There is a lot of scapegoating of individuals when things go wrong in public institutions,” says Gillwald. ‘While there may well have been a failure in leadership, the leadership did not appoint themselves.

‘What we are seeing is the ­unintended outcome of policy contradictions, poor institutional arrangements, an unclear market structure for the sector and a lack of clarity on the role of such public institutions,” she said.

Mokone-Matabane refused to respond to the M&G‘s questions this week, claiming that Sentech was waiting for Nyanda to engage the board on the task team report.

‘Responding at this stage would be pre-empting the dialogue between the board and the minister,” said Sentech spokesperson Polly Modiko.